Competition boss
Rod Sims
will be doing his current and future political masters a favour if he can let off some fireworks in the war between supermarkets and food producers before the September election.

Unless the Australian Competition and Consumer Commission can show it has the will and the firepower to deal with alleged misuse of power by retailers, supermarkets face the prospect of more radical intervention pushed by federal politicians under pressure from their farming constituents.

“It’s all about buying time to persuade the Senate he already has the power he needs, so he doesn’t get stuck with some stupid new law that is impossible to enforce," one insider says.

If Sims fails, the supermarket dispute threatens to reopen the wounds between the Coalition’s Nationals MPs and the free-market Liberals, who are hotly divided on issues like foreign investment, water rights and wheat marketing.

For Labor, an assault on cheap supermarket prices would be polling disaster for the party’s blue-collar support base.

“It will be hell for
Woolworths
and Coles if we get five senators at the next election," says Australia Party leader
Bob Katter
about his party.

“And don’t forget, we can count on [crossbench senators John] Madigan and [
Nick] Xenophon
to back us."

Katter is touring the eastern seaboard drumming up candidates for his party in rural and agriculture seats, where he has an attentive audience to listen to his ideas of splitting Woolworths and Coles up into smaller companies in order to shatter their market dominance and create more competition for commodities.

Related Quotes

Company Profile

Assistant Treasurer
David Bradbury
and Agriculture, Fisheries and Forestry Minister
Joe Ludwig
have made clear to the food industry they will not consider any more legislation to break supermarket dominance or to enshrine extra protection for suppliers.

Yet even Labor MPs in regional seats, particularly those with dairy farmer constituents, are acutely aware of the allegations of unfair supermarket practices swirling in the industry for the past two years. Katter’s Australia Party wants to reduce the market dominance of Coles and Woolworths and will push for divestment of some stores or even a break-up of the businesses if Katter can build a voting block in the Senate after the election.

His push echoes the concerns of Nationals senators
Fiona Nash
and
Barnaby Joyce
, and of independent MP
Tony Windsor
, regarded as one of the sane men of politics, who says that the major parties only pay lip service to supporting local producers.

“Fuel Watch and Grocery watch only existed to give the consumer the lowest possible price and inherent in that is to do it, you can screw the farmer," Windsor says.

Windsor knows Rod Sims personally and respects his ability, but doubts whether Labor or the Coalition will adopt any meaningful measures to protect farmers against the market dominance of retailers.

“Rod will be hamstrung in any consumer affairs investigation because the focus will always be on getting the lowest prices for consumers," Windsor says.

“There is a lot of hypocrisy around, including the consumers who say they want food security and want to know where their food is coming from, but they are not interested in paying for it."

Independent MP
Rob Oakeshott
has many dairy farmers in his electorate who complain about the supermarkets’ $1 a litre milk war, but says he is unconvinced Katter’s divestment plan would work.

But Senator Nash, who is also a sheep farmer on the Central West of NSW, is concerned Australia does not have the divestiture laws that it needs if the ACCC finds there is evidence of a misuse of market power.

She says Sims has a heavy responsibility weighing up the combined impact of Coles and Woolworths on commodity markets, like lamb, against the long-term future of local producers dealing with rising input costs and squeezed margins.

There is also political sensitivity over the loss of food manufacturing jobs, which the Australian Food and Grocery Council estimated to have cost 7000 people their work in 2011-12 in an industry where output contracted by 4.5 per cent.

Katter argues the politics of economics have shifted too far in favour of the consumer at the expense of that other economic driver – production.

“The mainstream parties are so owned by Woolworths and Coles that they would die in a ditch before they relent on the issue," Katter says.

He reckons he has plenty of ammunition to fight for small food producers and manufacturers.

“The fact is breaking up a large company into five smaller companies pushes the share price up, not down," Katter says, hinting that shareholder activism will be a key tactic of his campaign.